Tundi’s Take: We need investments in ocean management, not just welfare

Greater financial support for effective marine and coastal management is necessary the world over – especially if management is going to address, simultaneously, the complex suite of issues integral to EBM.

But even as the need for financing accelerates, the budgets of management agencies are shrinking (global recession and dealing with immediate security risks and conflicts both play into this). New revenue streams are badly needed – and these must be in the form of the steady, continuing support that keeping coastal systems healthy requires, not the one-off infusions of cash that often come from the donor community.

This makes finding innovative financing solutions for EBM imperative and urgent. In particular, this means that those who benefit from well-managed, productive, and valuable ocean areas must invest in their management. Naturally, many beneficiaries of marine ecosystem services would prefer to continue as free riders. But competition for ocean space and resources is ever increasing, and for those that benefit from ecosystem goods and services, not actively supporting marine management may mean that those benefits stop flowing. Enlightened members of the private sector are unlikely to let that happen as long they can see that management is resulting in return on investment.

Innovative financing schemes emerging

Luckily, innovative financing schemes that allow the public sector and the private sector (both businesses and communities) to share marine planning and management costs are emerging. These schemes include payments for ecosystem services (PES), biodiversity offsets, public/private partnerships, Marine Conservation Agreements [MCA], trust funds and other endowments, as well as impact investing.

The emergence of PES and other market-based mechanisms for protecting natural capital has been particularly slow in the marine realm for several reasons. One is the lack of conventional property rights at sea. This has required contract developers to utilize access rights rather than property rights to ‘sell’ ecosystem service delivery. Another major factor in the slow utilization of PES for marine and coastal habitat protection has been the limited capacity to date for assessing marine ecosystem services, determining their value, and ascertaining what factors affect ecosystem services delivery.

New rapid assessment techniques for quantifying and valuing marine ecosystem services, from blue carbon to shoreline stabilization, are now coming on line, however. The location of concentrations of ecosystem service-delivering habitats can be mapped, as can benefits flows across broader landscapes, setting the stage for innovative financing mechanisms like PES.

However, while we may be better at assessing and valuing benefits and services flowing from oceans, attracting investment in management is still not easy. I would argue that the biggest hindrance to doing so lies in our distaste for performance-based management and a naïve sense that EBM should be done because it is the right thing to do, not because it can profit investors. And while I share a distaste for commodifying nature, I also think the only way to set up the sustainable financing so necessary for lasting EBM is to attract the support of businesses that benefit from ecosystem goods and services alongside ocean advocates.

To do so we have to set up our management regimes so they deliver. Performance does not have to be measured in profitability, although most investors will see that first and foremost among the other elements of the triple bottom line, i.e., environmental, economic, and social outcomes. Performance can also be gauged in terms of satisfaction with management outcomes, equitable sharing of benefits, reduction in user conflicts, and hopes for the future. Planning performance-based management, with cost-effective monitoring schemes to demonstrate pay-offs, lends itself to investment in oceans, as opposed to welfare for oceans. And great investments are likely to stand the test of time, while welfare ebbs and flows like the tides.

Comments

Tundi makes some great points about the need to concentrate on sustainable funding for the management of marine environmental management, and some donors are coming to understand the problem. One example is the Keith Campbell Foundation that funds environmental programs and projects in the Mid-Atlantic region of the USA, with an emphasis on RiverKeeper programs (watershed management programs organized under the Waterkeeper Alliance, headed by Robert Kennedy, Jr.) Beginning about eight years ago the Campbell Foundation not only paid for real world administrative costs of watershed restoration projects (see discussion below), but they also make grants just for the purpose of upgrading the management capacity of local organizations that are ready to move up from a volunteer model to paid, full-time staffing.

A detail beyond the scope of Tundi's plea for better funding of management of environmental groups is the need for these groups to calculate and advocate for the payment of full administrative costs for the "welfare projects" to which Tundi refers. The terminology varies between England and the USA, but in the US non-profit system I learned, these are called indirect costs. In the case of organizations with a significant core staff, offices, and networks of both the physical and human variety, such indirect costs can be 30% to 50% of total direct costs. The crime is that it is common for donors to limit indirect cost reimbursements to 10% or less. I know of dozens of medium and small environmental organizations that have been damaged or destroyed by their inability to meet both stringent performance requirements for projects AND the need to increase unrestricted contributions by 25% to 50% to cover the unfunded indirect costs.

The US Government is REQUIRED to PAY the full amount of all project expenses that it funds, both DIRECT and INDIRECT. But many agencies, including especially environmental groups such as EPA, NOAA, and the Department of Commerce, circumvent the law by making large grants to intermediary organizations such as the National Fish and Wildlife Foundation, which in turn set up grant programs exempt from the indirect cost payment requirement. It's not too hard to circumvent this problem if you are a billion dollar operator, but small- and medium-sized non-profits, frankly, are losers in this system.

Yes, getting full funding for smart management of organizations that carry out a lot of individual project is important and I can't wait to see the multi-year financial records that demonstrate just how it can be achieved within the current multi-national institutional environment.

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